Re-importation is a dead issue, at least for now

In the pre-Christmas drive toward passing the healthcare-reform legislation, the US Senate did not pass an amendment to legalize importation, in a vote on Dec. 14 (the bill, SA 2793, actually had a majority vote in favor, but didn’t meet the 60-vote threshold that the Senate is applying to healthcare reform). A week before the vote, FDA Commissioner Margaret Hamburg wrote a letter to Sen. Sam Brownback (R-KS), saying, according to press reports, that there are “significant safety concerns” over the practice. Under the proposed legislation, FDA inspectors would have had to certify the manufacturing and distribution practices of overseas companies; meanwhile, the difficulties that FDA has had in inspecting facilities that legally send products and intermediates to the US is well-documented.

Then, in a television interview on Dec. 20, White House policy advisor David Axelrod said that “The president supports … safe re-importation” and that the Administration would move forward with re-importation after the current healthcare reform debate ends.

“Re-importation” (or, to be more accurate, importation of finished products from distributors) has been fought over for more than a decade; it appears to be one of the main bargaining points that the Pharmaceutical Research and Manufacturers Assn. (PhRMA) required for its acceptance of the healthcare reform deal earlier this year. Proponents seek to take advantage of the price differential between the US market, where branded product prices are set by the maker, and overseas markets, where they are negotiated by government payers. PhRMA and others have long argued that the higher US prices subsidize the R&D spending by the industry; critics counter that only a small portion of industry revenue goes to R&D. The experience of European governments, where parallel trade among EU members is encouraged, points to much of the price differential being absorbed by distribution intermediaries, and a greater susceptibility to counterfeit product entering the supply chain.